THINK TANK | Addressing Corruption in Ukraine

Solving corruption by law alone will not
succeed. Current legal reforms have been described as piling up new laws on a
massive post-soviet mess. The slow pace of legal reforms demands sustained
effort and a culture of integrity. Under the best of conditions, the effect of
law is very weak to prevent corruption, and must be supported by ethical
conviction. In the current context of Ukraine, emphasis on the legal issues in
the Parliament is not enough. Civil society, young professionals, schools, and
families will need to actively promote Ukrainian values and reject the culture
of corruption.

Reducing corruption in Ukraine must include a
change in culture— legal reform alone cannot succeed

“When the risk to be caught is very low, as
is the case with corruption, values will offer a higher compliance level than
rules.”

Corruption in Ukraine has been practiced by
high-ranking public officials, ministers, members of the Verkhona Rada, and the
head of state. They have been ready to cash in on assets obtained after the
collapse of the Soviet Union, infrastructure projects, the sale of their
country’s resources, public procurement, and more. The proceeds are
conveniently hidden in confidential bank accounts, more often than not in the
name of opaque corporate structures registered in offshore centres and having
no other purpose than to hide the identity of their true owners [2]. The overwhelming level of corruption
during the Yanukovych presidency led to protests and revolution. The core issue
was corruption.

The corrupt government official uses state
power not in the public interest, which is the purpose, but for private gain;
which is against the law— or should be. Therein lies one current conundrum. The
rule of law seeks transparent and uniform application of law, but the current
laws are out of date (“ghosts” from the Soviet period) or contain internal
contradictions which many believe were intentionally created during the past
decades. The end result appears to be that corruption is still relatively
unchecked in spite of a great deal of public desire to eradicate it.

In Ukraine, government officials have felt
protected by the system. Reforms are under discussion every day, and there is a
struggle going on between those said to be benefitting from the existing
system, and those that want to eradicate corruption. The reform movement was
created from people rebelling against the legal system, and wishing to live
under a better system — a system more ethical and with positive moral
values.

Those in authority involved in corruption
consider the risk to be caught, and whether or not they are able to circumvent
it.When the risk to be caught is very low, as is the case with corruption,
values will offer a higher compliance level than rules or the law.

The OECD Convention writes that
‘bribery….raises serious moral and political concerns’ [3]. This means that the effect of law
is weak and needs to be supplemented by ethical conviction. Thus, in the
current context of Ukraine, moral or ethical issues must also be stressed.

“Existing Ukrainian legislation is a massive,
post-Soviet mess, which incorporates numerous special interests and corrupt
schemes accumulated over 20 years… Piling up new laws on top of this mess will
not miraculously turn it into a new system… Rule of law means, among other
things, strict enforcement of the existing laws, but if the entire body of
current outdated and often absurd legislation gets enforced, the country will
be paralyzed. This is why the current system cannot function without selective
enforcement, which gives the vast bureaucratic class, including law enforcement
and the judiciary, enormous discretionary power over the ordinary citizens and
businesses and feeds systematic corruption. No anti corruption measures can
succeed if they are undertaken within this system…” [4].

Since the “revolution of dignity” in Ukraine,
great strides have been made to address corruption [5]. However, none are satisfied with the
progress made to-date.

The Dichotomy of Ukrainian vs Soviet Value
Systems

Values and law belong to conceptually
different worlds. With values, compliance rests on inner conviction rather than
on the law. In a recent survey, those interviewed connect the values from the
Soviet period to post-Soviet Ukraine’s corruption problems [6].

Ultimately the difference in values, between those
inherited from the Soviet Union and those of Ukraine as a separate nation
(representing the present and future), will significantly impact the outcome of
legal reform.

100 years of cultural subjugation

The history of Ukraine (from the mid-20th
century) was a history of how Ukrainian patriotism and nationalism were
physically destroyed [7]. With near unanimity in Ukraine the basis
for the current conflict is a clash of values.

The revolution of dignity revealed a
dichotomy between Ukrainian values (i.e., patriots not wanting to live in a
culture of corruption) and a government and culture inherited from the past. Values
that were privately held by many Ukrainians became expressed values during the
revolution. The strong majority of Ukrainians, whether from the West
or East, did not want to continue business as usual with Russia, and a culture
where corruption and its lack of moral stigma were accepted as normal.

Applebaum [8] has written that: there is clearly
a… generational change, people have different kinds of relations with each
other, people speak differently and act differently than they used to…” This
suggests a change in culture.

Defeatist Acquiescence to Corruption

‘The majority of corruption practices in
Ukraine occurs because of the acquiescence of citizens, who are aware of the
facts, but are not going to denounce.” (Transparency International Ukraine, http://ti-ukraine.org/en/news/oficial/5662.html)

In a self-perpetuating cycle, reinforced by
years of unfulfilled promises, the general population does not trust that
government proclamations of combating corruption are sincere. Due to this
cynicism, many older Ukrainians adopt a fatalistic perspective regarding the
potential for positive change. This is very much part of the problem.

The sad fact has been that corruption
actually makes life easier for average Ukrainians [9].

Most citizens do not recognise their own role
in both cultivating and perpetuating the corruption they want the government to
eradicate. There is little support for the idea that petty corruption (e.g.,
paying bribes) is as corrosive to good governance as grand corruption
(government rent seekers). Few see that bribes erode the rule of law,
meritocracy, and trust in governance throughout society.

It is important that the younger post-Soviet
generation starts to believe that change is possible. New values, and their
implementation in the laws, are of paramount importance [10].

Love of One’s Country

Research completed recently by 2 American
academics reported on attitudes and behaviours of Ukrainian citizens and
focused on changing current behavior [11]. Applebaum [12] reflected that national identity is
still quite weak from the government side. However, “among people it has grown
quite a lot.” She continues “the Russian invasion has made people very aware
that they want to live in a country with different values from those of
Russia….”

Religion has provided the framework for moral
and legal codes which have transformed anarchical systems to more sophisticated
forms of governance [13]. The values that are the basis for a
culture of integrity are none other than those values taught by all religions
and espoused by those with no religious affiliation. To cultivate a new
public consciousness, it is necessary to view corruption as corrosive to
society, immoral, and unacceptable.

Applebaum [14] emphasised the need to love one’s
country, one’s space, and to desire to make the place where one lives better.
“To feel connected to and feel responsibility for the place in which you live
is incredibly important…”

Empowering Values and Legal Reform

Focusing only on legal reforms is
insufficient to overcome a culture of corruption. A wider, societal effort is
required to create a new culture. A new culture is necessary to replace endemic
corruption that many believe to be inherited from the Soviet Union and its
aftermath. A new culture will express a love for Ukraine as a separate national
entity— different from its Soviet past.

Public support is a requirement for
reform [15]. New societal values must be engendered
that create a new culture, such as trustworthiness, openness, transparency,
participation, and accountability. Such words and values are repeated like a
mantra in contemporary Ukraine in the context of legal and government reform.
However, a wider societal effort is needed to succeed, involving not only
government, but also business leaders, Universities, schools, and family.

Too often in contemporary Ukraine statements
regarding integrity and values are considered to be just empty words to cover
continuing practices. Warren Bennis defines integrity as an alignment of words
and actions with inner values. To overcome an acquiescence to corruption,
sufficient concrete examples demonstrating that words and actions coincide are
needed.

A culture of integrity must be developed and
the development must take many forms. For example, the business community can take the lead and
express new values in action or MBA programs can train business leaders about
the positive effects of a integrity-based business culture, which is taught in
Western Europe and North America as a source of competitive advantage. The
school system should teach that personal values impact on happiness and
success, and that corruption is not only bad for society but also perverts the
inner life of those who engage in corruption. NGOs can use their membership and
unique activism to engage in practical actions to combat corruption and replace
it with a new Ukrainian culture and integrity.

Conclusion

Legal and judicial reforms are essential to
reduce corruption. But the law is only part of the effort required. A large
number of anti-corruption measures are listed in a recent report on legal and
governance reform in Ukraine. For some of them there is a degree of urgency,
including:

introducing a comprehensive protection for whistleblowers;

requiring the disclosure of the beneficial owner(s) of companies
(opaque offshore structures must become transparent);

increased public oversight and independence of the anti-corruption
agency; and

public pressure to continue reforms to the state procurement
system in order to ensure its objectivity and transparency.

But to succeed in combating corruption, a new
culture of integrity must replace the current culture of corruption. The
Ukrainian revolution revealed that many Ukrainians want a change, as
demonstrated through non-violent activism and a willingness to sacrifice for
change (including with their lives). Creating a new culture requires the
activism of the business community, schools and Universities, families and
NGOs. A wide societal response is mandatory.in order to go from a state where
corruption permeates all aspects of daily life to a state where citizens and
enterprises are only exceptionally confronted with corruption.

About The Authors:

Gary Reusche, Professor with the International Management
Institute (MIM-Kyiv), Advisor for Agricultural Lending, Bank Credit Dnepr,
former program manager for World Bank group and European Union projects in
Ukraine, former regional manager major Netherlands consulting company operating
in Ukraine since 1992 and till present day.

Jean-Pierre Méan, lawyer former General Counsel of SGS, an
international verification company, former Chief Compliance Officer of the
European Bank for Reconstruction and Development (EBRD) and former Chair of the
Swiss Chapter of Transparency International ; Chair of the Working Group
on the revision of the Rules on Combating Corruption of the International
Chamber of Commerce and member of the ISO Committee working on an Anti-Bribery
Management Systems Standard (ISO 37001)

The authors don`t work for, consult to, own
shares in or receive funding from any company or organization that would
benefit from this article, and have no relevant affiliations

EndNotes

[1] See in this respect: “J.P. Méan, The
Dichotomy of Values vs. Rules in Anti-Corruption Law, in: The True Value of
Corporate Social Responsibility, Palgrave MacMillan, Edited by Barbara Fryzel,
2015”

[2] Unfortunately, the banking system
outside of Ukraine seems to have no second thoughts about servicing these
financial flows and giving refuge to public officials accused of crimes in
Ukraine. Globalisation provides a largely unregulated area for corruption. For
example, in order to seize assets exports by a public official accused of
corruption in Ukraine, evidence must be provided by Ukrainian prosecutors that
may themselves be part of the corruption that helped obtain the assets in the
first place. So the assets are freed because investigations and necessary facts
cannot be obtained in Ukraine.

[7] Interview with Pulitzer Prize-winning
author, international journalist and expert on Eastern Europe Anne Applebaum
about the development of Ukrainian nationalism over the past century and how
the country’s EuroMaidan protests in late 2013/early 2014 led to a civil
society drive. http://uatoday.tv/society/anne-applebaum-518447.html;
23 Oct 2015